'Immunity slipping' as sales growth slows for Ted Baker

Published on Thursday 13 November 2008 20:33

TED Baker, the global fashion label with Scottish roots, is bracing itself for a challenging end to the year after sales growth eased in the third quarter.

The firm, which has stores in the UK, continental Europe, the US, Middle East and Asia, said revenues rose 1.8 per cent in the 13 weeks to 8 November. This compares with 8.2 per cent growth in the 28 weeks to 9 August.

Although retail sales were up 13.3 per cent in the third quarter, against 17.5 per cent in the first half, the group's wholesale takings were down by 21 per cent, accelerating a first-half decline of 12.1 per cent. The firm had previously said 2008 wholesale sales would fall compared with the year before.

Gross profit margins were in line with expectations, the firm said.

Ted Baker was founded by current chief executive Ray Kelvin as a single shirt outlet in Glasgow in 1987. Expansion across the UK quickly followed.

The group, which has its headquarters in London, is now a global brand, producing men's, women's and children's clothing, fragrances, eyewear and accessories. Its wholesale division supplies retailers such as John Lewis and House of Fraser. Kelvin said that although autumn and winter collections had been well received by customers he remained cautious about trading for the remainder of the financial year.

"We remain mindful of the current economic uncertainty and will continue to manage our business carefully," he said.

"We believe that the strength of the Ted Baker brand combined with our robust multi-channel international distribution means we are well positioned to deal with the challenges ahead."

During the quarter, the group opened four stores – one each in Bristol and Liverpool and two within the new Westfield shopping complex in London.

Numis analyst Andrew Wade said: "This was a weak Q3 update from Ted, reflecting the pressure the macro-economic backdrop is having on the consumer. The perception of immunity that hung over the luxury and 'bridge' fashion sub-sectors is slipping away and we can see that even a strong business with a strong brand can do little in the face of rapidly contracting demand."

Numis cut its pre-tax profit forecast on the fashion group from 23.1 million to 21m for the current year.